• by Kate Kaye , November 11, 2005

The automotive market is revved up for behavioral targeting. Mitch Lowe, CEO of automotive interactive ad network Jumpstart Automotive Media, predicts the big-spending auto advertisers he works with will allocate 10 percent of their online ad budgets to behaviorally targeted ads next year. Behavioral Insider chatted with Lowe about how behavioral targeting is helping drive the unique online automotive ad space.

Behavioral Insider: My understanding is that automotive advertisers are beginning to gravitate towards behavioral more than in the past. Is that the case?

Lowe: I think it's the natural evolution, as their budgets have grown and there's no more place to reach in-market consumers contextually. They'd rather spend their budget and eliminate media waste by having somewhere around 100 percent of their ads shown to consumers who are going to buy a car within the next two weeks, rather than just hoping that when they run with demographic or psychographic buys, some really small percentage of those consumers may buy their car in two weeks.

BI: Why are auto advertisers warming to behavioral targeting?

Lowe: There has to be a value proposition to three different parties. There needs to be a value proposition to the automotive Web site where the behavior is being captured, to the non-automotive Web site where the ad is running, and for the advertiser. All of the automotive Web sites - NADA Guides, Kelly Blue Book, Vehix, what have you - they're 100 percent sold out. There's no inventory to be found on any of those sites. So, when an automotive advertiser is doing its advertising, it spends money first to reach people that are known to be in-market and then they start working up the funnel.

A consumer who's in-market for a car is in market for, say, eight weeks. He's going to visit four or five automotive Web sites, and will visit each of them two or three times, and that's it. And he's still spending the vast majority--98 percent plus--of his online time off of an automotive Web site. But they're still very in-market and receptive to car messaging. So, there's a huge need and interest by an automotive marketer to try and reach those people.... The promise of behavioral targeting is now you can find those users when they leave an automotive Web site.

BI: How are auto advertisers quantifying results of behavioral advertising?

Lowe: Versus buying by demographic or psychographic, you're going to see lifts in the 200-300 percent range. Versus contextual, and versus finding somebody who's already in-market contextually, you're going to see it about the same performance.... Creative plays a huge part in that.

BI: People forget that they can really make the messaging more targeted. Are you seeing any auto advertisers get to that level of creative refinement in their targeting?

Lowe: Chrysler's actually really sophisticated with targeting the message to the type of environment that they're in. So, they're not just repurposing ads that would be shown on a Vehix.com; they're saying, 'Oh, this is somebody who's been on an auto Web site and now they're in sports.' And they're making the message resonate to where the actual ad is showing.

BI: How does the pricing compare to more traditional forms of online targeting?

Lowe: From a CPM perspective, today it's running at a slight discount to contextual. It really just depends. If you're OK with saying it's going to be run-of-network with really specific targeting criteria, it's going to run at a slight discount. If you want it to run on a specific site, and are looking for people who are looking for luxury SUVs and they're now looking at stock quotes, that type of thing is going to be at a premium. But the vast majority right now are not trying to double-target. We're seeing the CPMs on that being in the $18-$22 range, whereas the same on a contextual auto site might be more like $21-$25.

The value proposition not only needs to work for the advertisers, it needs to work for the publishers. NADA Guides has sold out all its inventory, so for them to be able to make additional money from the user that leaves the site, and the ad gets run on ValueClick, it's just increased revenue for NADA Guides and for ValueClick, and for thousands of other Web sites that never get to touch automotive budgets [otherwise]. For them to be able to get even some small portion of a $20 CPM is way more than they're selling their typical inventory for.

BI: Is there any concern from automotive publishers about the use of their users' data to serve ads on other sites? Do they have any qualms about it?

Lowe: What they want is to centralize that data in one location with a company they trust who's going to be able to maximize the value of it. Certainly, their biggest asset is their audience, so you bet there are huge concerns. They wouldn't let multiple people have access to this data.

BI: Are there any other issues that you think people should be aware of when it comes to the automotive space and behavioral targeting?

Lowe: I think creative is going to be somewhat of a challenge, because the more relevant the creative the better the results are going to be. But agencies are already so understaffed that this is just one more thing for them to think about.... I've talked to every one of the automotive advertisers about behavioral targeting and it's something they're going to do in 2006. Half of them have already done testing, and they all like the results of what they've done. Behavioral targeting is not going to take over the world, but for an automotive marketer...it will be about 10 percent of their online spend in '06, it'll be 15 percent in '07 and it will grow to 20 percent plus.

Have something to say about behavioral targeting? If you'd like to be featured in an upcoming edition of Behavioral Insider, contact Kate Kaye via email at kate@mediapost.com